A row at the climate target setting organisation SBTi has pitted staff against the CEO, with demands for his resignation, after he attempted to approve the use of offsets without following due process. Although he has backtracked for now, the argument has not been resolved.
This is all about how companies can achieve their greenhouse gas reduction goals. The very wording of Net Zero implies that there will need to be compensation for emissions that can’t be eliminated. And offsets are a tradeable and accessible way of purchasing the necessary compensation. They also provide a mechanism to share out the capital for new emissions savings projects between many funders. But which and whose emissions should be eligible for offsetting?
Corporate emissions are about to become much more visible. From this year in the EU, large companies and most publicly quoted ones will have to report their own greenhouse gas emissions and make an assessment of those of their supply chains and their products in use. The published numbers will be audited so that governments, investors and the public can rely on them. Comparing different companies in the same sector, with the addition of other data such as production volumes, should show up those who are lagging behind. The aim is that this will catalyse action.
The reporting obligation is quite wide. It covers not only a company’s direct and indirect emissions (Scopes 1 & 2) but also those associated with the supply and use of their products, Scope 3. It is more difficult for companies to find out Scope 3 emissions, but as one company’s Scope 3 emissions are another’s Scopes 1 and 2, there is in-built double counting. Indeed, in any one supply chain, there will be multiple counting of different subsets of Scope 3 emissions. The GHG Protocol acknowledges this fact saying ‘Because of this type of double counting, scope 3 emissions should not be aggregated across companies to determine total emissions in a given region’.
So, the row at SBTi, which concerns Scope 3 emissions only, seems overblown to some. The Director of the Potsdam Institute for Climate Impact Research told the Guardian Newspaper that ‘he did not think that the SBTi decision was so dramatic’. He went on to say that; ‘In a transition phase, I can see that allowing for offsetting (of Scope 3) may be the only options ………. if the offsets are truly robust, preferably focused on ‘like for like.’ WWF, one of the founders of SBTi put the opposing argument, saying; ‘WWF has long advocated that carbon offsetting needs to be limited in its application to address a small percentage of residual emissions’.
Offsets are more credible when they are directly related to the emissions they are counteracting, and the benefits are backed up by measurements. Renewable electricity certificates can compensate for the use of fossil generated electricity. Carbon accumulation in the soil or forests, or carbon capture and storage could be reserved for carbon dioxide emissions.
But this only goes so far. For example, it is hard to apply to nitrous oxide, methane, and the other ‘Kyoto’ gases, all of which have a significant effect on the climate. And, more importantly, what about the top of the supply chain when farmers, or producers in some countries aren’t forced to curb their own emissions? And the bottom of the chain when members of the public who use the products, have no requirements to change their behaviour. Perhaps some offsets should be reserved for these groups? Such discussions will become louder and more frequent as 2050 approaches; the very public spat at SBTi is just the beginning.
Published: 26 April 24
